Exhibit 10.18


 


RESACA
EXPLOITATION, INC.


 


NONQUALIFIED STOCK OPTION AGREEMENT

(UK ELIGIBLE OPTIONEE)


 


Optionee: John William Sharp Bentley


 


1.             Grant
of Stock Option.   As of the Grant Date (identified in Section 20 below), Resaca
Exploitation, Inc., a Texas corporation (the “Company”) hereby
grants a Nonqualified Stock Option (the “Option”) to the Optionee (identified above), a citizen of the United Kingdom,
and an Outside Director of the Company, to purchase the number of shares of the
Company’s common stock, $0.01 par value per share (the “Common Stock”), identified in Section 20 below (the “Shares”), subject to the terms and conditions of this agreement (the “Agreement”)  and the Resaca
Exploitation, Inc. 2008 Stock Incentive Plan (the “Plan”). The Plan is hereby incorporated herein in its entirety by
reference. The Shares, when issued to Optionee upon the exercise of the Option,
shall be fully paid and nonassessable. The Option is not an “incentive stock
option” as defined in Section 422 of the U.S. Internal Revenue Code.


 


2.             Definitions.   All capitalized terms used herein shall have the meanings set forth in the
Plan unless otherwise provided herein. Section 20 sets forth
meanings for certain of the capitalized terms used in this Agreement.


 


3.             Option
Term.   The Option
shall commence on the Grant Date (identified in Section 20 below) and
terminate on the eighth (8th) anniversary of the Grant Date as specified in Section 20. The period
during which the Option is in effect and may be exercised is referred to herein
as the “Option Period”.


 


4.             Option
Price.   The Option
Price per Share is identified in Section 20.


 


5.             Vesting.   The total number of Shares subject to this
Option shall vest in accordance with the Vesting
Schedule (described in Section 20). The Shares may
be purchased at any time after they become vested, in whole or in part, during
the Option Period; provided, however, the Option may only be exercisable to
acquire whole Shares. The right of exercise provided herein shall be cumulative
so that if the Option is not exercised to the maximum extent permissible after
vesting, the vested portion of the Option shall be exercisable, in whole or in
part, at any time during the Option Period.


 


6.             Method
of Exercise.   The Option
is exercisable by delivery of a written notice to the Secretary of the Company,
signed by the Optionee, specifying the number of Shares to be acquired on, and
the effective date of, such exercise. The Optionee may withdraw notice of
exercise of this Option, in writing, at any time prior to the close of business
on the business day that immediately precedes the proposed exercise date.


 


7.             Method
of Payment.   Subject to
applicable provisions of the Plan, the Option Price upon exercise of the Option
shall be payable to the Company in full either: (i) in cash or its
equivalent; (ii) subject to prior approval by the Committee in its
discretion, by tendering previously acquired Shares having an aggregate Fair
Market Value (as defined in the Plan) at the


 

















 


time
of exercise equal to the total Option Price; (iii) subject to prior
approval by the Committee in its discretion, by withholding Shares which
otherwise would be acquired on exercise having an aggregate Fair Market Value
at the time of exercise equal to the total Option Price; or (iv) any other
permitted method pursuant to the applicable terms and conditions of the Plan.


 


As
soon as practicable after receipt of a written notification of exercise and
full payment, the Company shall deliver to or on behalf of the Optionee, in the
name of the Optionee or other appropriate recipient, Share certificates or
other evidence of ownership for the number of Shares purchased under the
Option.


 


8.             Restrictions on Exercise.   The Option may not be exercised if the
issuance of such Shares or the method of payment of the consideration for such
Shares would constitute a violation of any applicable federal or state
securities or other laws or regulations, or any rules or regulations of
any stock exchange on which the Common Stock is listed. In addition, Optionee
understands and agrees that the Option cannot be exercised if the Company
determines that such exercise, at the time of such exercise, will be in
violation of the Company’s insider trading policy.


 


9.             Termination of Employment.   Voluntary or involuntary termination of
Employment shall affect Optionee’s rights under the Option as follows:


 


(a)           Termination for
Cause or Removal from the Board.   The non-vested portion of the Option shall
expire and terminate on the date of termination of Employment and shall not be
exercisable to any extent if Optionee’s Employment is terminated for Cause (as
defined in the Plan at the time of such termination of Employment) or if
Optionee’s Employment is terminated as a result of Optionee’s removal from the Board in any manner except upon
the failure to be re-elected to the Board by the Company’s shareholders. The
vested portion of the Option shall expire on the thirty (30) day anniversary of
the termination of Employment to the extent not previously exercised by Optionee.
In no event may the Option be exercised after the earlier of (i) the
expiration of the Option Period or (ii) the thirty (30) day anniversary of
the date of termination of Employment for Cause or as a result of Optionee’s
removal from the Board in any manner except upon the failure to be re-elected
to the Board by the Company’s shareholders.


 


(b)           Voluntary
Termination.   If
Optionee’s Employment is voluntarily terminated, then (i) the non-vested
portion of the Option shall immediately expire on the termination date and
(ii) the vested portion of the Option shall expire to the extent not
previously exercised within one (1) year after such termination date. In
no event may the Option be exercised by anyone after the earlier of
(i) the expiration of the Option Period or (ii) one (1) year
after the termination of Employment date even if Optionee becomes deceased
during such period.


 


(c)           Death or
Disability.   If
Optionee’s Employment is terminated due to death or Disability (as defined in
the Plan at the time of such termination), then (i) the Option shall
immediately become fully vested on the termination of Employment date and
(ii) the vested portion of the Option shall expire on the one
(1) year anniversary date of the


 


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termination
of Employment date to the extent not previously exercised by Optionee or, in
the case of death, by the person or persons to whom Optionee’s rights under the
Option have passed by will or by the laws of
descent and distribution or, in the case of Disability, by Optionee or
Optionee’s legal representative. In no event may the Option be exercised by
anyone on or after the earlier of (i) the expiration of the Option Period
or (ii) one (1) year after the date of
termination of Employment due to Optionee’s death or Disability.


 


(d)           Other Involuntary
Termination. If Optionee’s Employment is terminated for any reason other
than for Cause, removal from the Board in any manner except upon the failure to
be re-elected to the Board by the Company’s shareholders, death, Disability, or
voluntary termination, then (i) the non-vested portion of the Option shall
immediately become fully vested on the termination of Employment date and
(ii) the vested portion of the Option shall expire to the extent not
previously exercised within one (1) year after such termination date. In
no event may the Option be exercised by anyone after the earlier of
(i) the expiration of the Option Period or (ii) one (1) year
after the termination of Employment date even if Optionee becomes deceased
during such period.


 


10.          Independent Legal and Tax Advice.   Optionee acknowledges that the Company has
advised Optionee to obtain independent legal and tax advice regarding the grant
and exercise of the Option and the disposition of any Shares acquired thereby.


 


11.          Reorganization of Company.   The existence of the Option shall  not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments,
recapitalizations, reorganizations or other changes in Company’s capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Shares or the rights thereof, or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.


 


12.          Adjustment of Shares.   In
the  event of stock dividends, spin-offs
of assets or other extraordinary dividends, stock splits, combinations of
shares, recapitalizations, mergers, consolidations, reorganizations,
liquidations, issuances of rights or warrants and similar transactions or
events involving Company, appropriate adjustments shall be made to the terms
and provisions of the Option as provided in the Plan.


 


13.          No Rights in Shares.   Optionee shall have no rights as a shareholder
in respect of the Shares until the Optionee becomes the record holder of such
Shares.


 


14.          Investment Representation.   Optionee will enter into such written representations,
warranties and agreements as Company may reasonably request in order to
comply with any federal or state securities law. Moreover, any stock
certificate for any Shares issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Shares
hereunder to comply with any law, rule or regulation that applies to the
Shares subject to the Option.


 


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15.          No Guarantee of Employment.   The Option shall not confer upon Optionee any
right to continued Employment with the Company or any affiliate thereof. If an
Optionee shall cease for any reason to be an Outside Director of the Company
the Optionee shall not be entitled, by way of compensation for loss of office
or otherwise howsoever, to any sum or any benefit to compensate the Optionee for the loss of any right or benefit
accrued or in prospect under the Plan.


 


16.          Withholding of Taxes.   The Company shall have the right to
(a) make deductions from the number of Shares otherwise deliverable upon
exercise of the Option in an amount sufficient to satisfy withholding of any
federal, state, local or foreign taxes required by law, or (b) take such
other action as may be necessary or appropriate to satisfy any such tax
withholding obligations. The provisions of Section 17 shall also
apply.


 


17.          Collection of Tax and National Insurance Contributions.


 


(a)           Where the Company is liable
to account to any tax authority (including HM Revenue & Customs or its
equivalent in an overseas jurisdiction) for any tax (including income tax and
national insurance contributions or their equivalent in an overseas
jurisdiction) payable by the Optionee in respect of or in connection with any
benefit or payments receivable by the Optionee pursuant to this Option (including,
for the avoidance of doubt, as a consequence of the exercise of the Option or
the issue or transfer of the Shares pursuant to exercise) and/or is liable for
any secondary class 1  national insurance contributions in
respect of any such benefits or payments (together, the “Option Tax
Liability”), the Optionee shall make a payment to the Company for an amount
equal to such Option Tax Liability, on demand. The Company shall have the right
to set-off against any amount payable by the Company any amount payable by the
Optionee to the Company under this Option and the Optionee consents to such
set-off.


 


(b)           In relation to the exercise
of the Option or the issue or transfer of any Shares to the Optionee pursuant
to such exercise, the Optionee shall, before the date of exercise of the
Option:


 


(i)            pay
to the Company an amount equal to the Option Tax Liability arising on or in
connection with that event;


 


(ii)           enter
into an agreement with the Company by which the board of directors of the
Company may require that, following the exercise of the Option or any part
thereof, the Shares are allotted or transferred into the name of a nominee for
the Optionee on terms that the nominee is unconditionally required to sell
sufficient Shares and use the sale proceeds (net of expenses) to meet any
obligations of the Company. For the avoidance of doubt, if, for any reason, the
nominee is unable to sell sufficient Shares the Optionee will remain liable
under the indemnity set out in this Section 17 and shall meet that
liability by payment made within 30 days of the Shares being allotted or
transferred;


 


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(iii)          enter
into other arrangements with the Company which shall ensure that an amount
equal to such Option Tax Liability will become payable to the Company within a
period determined by the Company in its absolute discretion; and/or


 


(iv)          if
so required by the Company, enter into an election pursuant to paragraph 3B of
Schedule 1 to the United Kingdom Social Security Contributions and Benefits Act
1992.


 


(c)           The obligations of the
Optionee under Section 17(b) shall be
treated as conditions which must be fulfilled before the Option may be
exercised and the Company shall not be obliged to allot and issue or procure
the transfer of any Shares or any interest in Shares until the Optionee has
complied with such obligations.


 


18.          Personal Data


 


(a)           The Optionee hereby agrees
and consents to:


 


(i)            the
collection, use and processing by the Company of his personal data (which has
the meaning it bears for the purposes of the United Kingdom Data Protection Act
1998) (“Personal Data”), for all purposes reasonably connected with the
administration of this Option and the subsequent registration of the Optionee
or any other person as a holder of Common Stock acquired pursuant to the
exercise of this Option;


 


(ii)           the
Company transferring his Personal Data to or between any of the organisations
forming the Company in any country for all purposes reasonably connected with
the administration of this Option;


 


(iii)          the
use of his Personal Data by any of the organisations forming the Company for
such purposes; and


 


(iv)          the
transfer to and retention of his Personal Data by any third party for such
purposes.


 


(b)           The Company shall handle all
of the Optionee’s records in accordance with the Company’s code of good
practice, although the Optionee may not have rights under data protection law.


 


19.          General.


 


(a)           Notices.   All notices under this Agreement shall be
mailed or delivered by hand to the parties at their respective addresses set
forth beneath their signatures below or at such other address as may be
designated in writing by either of the parties to one another, or to their
permitted transferees if applicable. Notices shall be effective upon receipt.


 


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(b)           Shares Reserved.   The Company shall at all times during the
Option Period reserve and keep available under the Plan such number of Shares
as shall be sufficient to satisfy the requirements of this Option.


 


(c)           Transferability of Option.   The Option is transferable only to the extent
permitted under the Plan at the time of transfer (i) by will or by the
laws of descent and distribution, (ii) by a qualified domestic relations
order (as defined in Section 414(p) of the Internal Revenue Code), or
(iii) to Optionee’s Immediate Family or entities established for the
benefit of, or solely owned by, the Optionee’s Immediate Family, but only to
the extent permitted under the Plan. No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities,
obligations or torts of Optionee or any permitted transferee thereof.


 


(d)           Amendment and Termination.   No amendment, modification
or termination of this Agreement shall be made at any time without the written
consent of Optionee and Company.


 


(e)           No Guarantee of Tax
Consequences.   The
Company makes no commitment or guarantee that any tax treatment will apply or
be available to Optionee or any other person. The Optionee has been advised,
and provided with the opportunity, to obtain independent legal and tax advice
regarding the grant and exercise of the Option and the disposition of any
Shares acquired thereby.


 


(f)            Severability.   In the event that any provision of this Agreement
shall be held illegal, invalid, or unenforceable for any reason, such provision
shall be fully severable, but shall not affect the remaining provisions of the
Agreement, and the Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had not been included herein.


 


(g)           Supersedes Prior
Agreements.   This
Agreement shall supersede and replace all prior agreements and understandings,
oral or written, between the Company and the Optionee regarding the grant of the
Options covered hereby.


 


(h)           Governing Law.   This Agreement shall be construed in
accordance with the laws of the State of Texas, without regard to its conflict
of law provisions, to the extent federal law does not supersede and preempt
Texas law.


 


20.          Definitions and Other
Terms.   The following
capitalized terms shall have those meanings set forth opposite them:


 


	
  (a)

  	
   

  	
  Optionee:

  	
  John
  William Sharp Bentley

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Grant
  Date:

  	
  July 17,
  2008

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Shares:

  	
  Three
  Hundred Thousand Nine Hundred Six (322,906) Shares of the Company’s Common
  Stock.

  
	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Option
  Price:

  	
  £1.30
  per Share.

  



 


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  (e)

  	
   

  	
  Option
  Period:

  	
  July 17,
  2008 through July 17, 2016 (until 5:00 p.m. CST).

  
	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Vesting
  Schedule:

  	
  Options
  covered by this Option Agreement shall become vested, provided that, 

  
	
   

  	
   

  	
  subject
  to Section 9, Optionee is then, and
  continuously from the Grant Date has been, an Outside Director of the
  Company, in accordance with the following schedule:

  



 


	
   

  	
  Vesting Date

  	
   

  	
  Vested %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  First Anniversary of the
  Grant Date

  	
   

  	
  33 1/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Second Anniversary of the
  Grant Date

  	
   

  	
  33 1/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Third Anniversary of the
  Grant Date

  	
   

  	
  33 1/3

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total

  	
   

  	
  100

  	
  %

  	
   

  	
   

  



 


Notwithstanding the above vesting schedule, in the
event of a “Change in Control” of the Company (as defined in the Plan at the
time of such event), the non-vested portion of the Option shall become
immediately 100% vested as of the Change in Control date.


 


[Signature page follows.]


 


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IN WITNESS WHEREOF, the Company, as
of the Grant Date, has caused this Agreement to be executed on its behalf by
its duly authorized officer and Optionee has hereunto executed this Agreement
as of the same date.


 


	
   

  	
  RESACA EXPLOITATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Lendrum, III

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  John J. Lendrum, III

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
  Resaca
  Exploitation, Inc.

  
	
   

  	
  1331 Lamar Street,
  Suite 1450

  Houston, TX 77010 USA

  Attn: General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John William Sharp
  Bentley

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


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